The National Skills Task Force identified a need for people to be trained in intermediate level 3 skills, the equivalent of GCSE, if the economy is to flourish.
With this in mind, the Government gave the Learning and Skills Agency the task - with the help of the Department for Education and Skills - of overhauling the sector and creating a network of centres of excellence for one or more areas of advanced level vocational training.
Half of all colleges will have at least one centre of vocational excellence, or COVE, by 2003-04, a year ahead of schedule, said Education Secretary Estelle Morris.
The UK produces fewer people with advanced craft, technical and equivalent skills than many other advanced industrial nations.
The centres will make new entrants to the labour market more employable, develop the skills of those already in work and enhance the job prospects of those seeking work.
They will specialise in meeting local, regional and national skill needs. COVEs will also complement the proposed New Technology Institutes, which will attempt to remedy the shortage of highly-skilled information technology technicians. Up to 20 of these will train new technicians at NVQ levels 3 and 4.
The 16 pathfinder colleges will act as exemplars of good practice and as mentors helping other colleges to transform themselves into COVEs.
The first COVEs will start operating in September. The Government will spend pound;100million establishing this national network of centres over the next three years. Some pound;60m will be for capital investment and the rest for recurrent costs.
Ruth Silver, principal of Lewisham college, whose department of computing has been designated a pathfinder COVE, said: "Centres of excellence are brilliant. It gives places a chance to stop trying to be everything to all people and to really have among their general provision something that is special.
"This is something that they can really invest in and develop teaching and learning in. As long as COVEs are modern, contemporary and future-focused, then I think they will start to help learners have better chances in life."
Some key issues have, however, yet to be resolved. There are fears that some training provision which is not given the sobriquet of a centre of excellence could wither on the vine.
Chris Hughes, chief executive of the Learning and Skills Development Agency, has said that the initiative will only work if colleges focus more on working with employers as clients to meet their skill needs.
Maria Hughes, research manager for skills, learning and work at the agency, said that COVEs' role was similar to that of teaching hospitals.
"The leadership role of COVEs is very important in terms of increasing the quality of training provision in subject specialisms," Ms Hughes said.
"COVEs will be the cutting- edge training providers who will lead their peer colleges in the development of excellence across the board."
The first COVEs are:
* Accrington and Rossendale College, construction;
* South Tyneside,nautical science and marine engineering;
* Bradford, applied science;
* The Arts Institute at Bournemouth, lens-based media;
* Bishop Burton, agriculture;
* Sparsholt College, game, wildlife and country management and fishery studies;
* Birmingham College of Food, Tourism and Creative Studies, hospitality and catering;
* South East Essex, media technology;
* Tameside , mechanical and electrical engineering;
* Warwickshire, general engineering;
* Lewisham, computing;
* Barking and Havering colleges with Ford, auto engineering and mechanical production;
* South Birmingham, childcare; lRichmond Adult and Community College, business and IT; lLancaster and Morecambe, hospitality and catering; lLeeds College of Technology, printing.